Rates cycle will peak in late '05, B&W predicts

The Bank should raise rates by 0.25% this week, followed by a second similar increase by August, Sanders writes in his latest monthly outlook. However, despite the near 50% increase in the base rate from its current 3.75% level implied by B&W's forecast, the lender still expects a soft landing for the housing market. With unemploment low and an ongoing gap between housing supply and demand, house price inflation should hit between 10% to 12% in 2004 alone, Sanders says. Thereafter, house price inflation rates should hit 5% in both 2005 and 2006 respectively, the forecast suggests. E...